Anyone with 401K/divorce experience?
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Join Date: Aug 2010
Posts: 2,349
Originally Posted by LexieCat 
You are PAYING this lawyer to advise you. Tell him or her you want an explanation for the 28 percent. Ask him or her to give you the law or regulation that governs it. "This is how it's done" doesn't cut it.
Alternatively, if you don't want to pay the lawyer for the time it may take to answer the question, contact the fund manager and ask that person. Ask if there is some reason for a 28 percent deduction when the account is split in this manner.
Alternatively, if you don't want to pay the lawyer for the time it may take to answer the question, contact the fund manager and ask that person. Ask if there is some reason for a 28 percent deduction when the account is split in this manner.
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Thread Starter
Join Date: Jul 2009
Location: WI
Posts: 195
The quick answer is, I will let you know when I find out.
I wish I had an answer but it isn't finalized. My divorce finalized in May, 2013. I asked my lawyer in August what I needed to do (I had thought I would have received instructions by then). I found out he had a business working on it for me (surprise, he never mentioned that prior) and he sent me a letter from them stating my x and I would need to pay a fee (surprise). I thought I was supposed to pay the fee after it was complete to find out 2 weeks ago that they want the fee up front (lack of communication once again). I started the process a couple of months ago to attempt to do it on my own (thinking the whole thing was taking too long) but it appeared the business I work for would have had to do a lot of work to understand their part (working with the powers that be at the 401k fund, so I didn't continue to pursue that). Now to see if my x will pay his 1/2. I'm thinking, good luck with that.
I wish I had an answer but it isn't finalized. My divorce finalized in May, 2013. I asked my lawyer in August what I needed to do (I had thought I would have received instructions by then). I found out he had a business working on it for me (surprise, he never mentioned that prior) and he sent me a letter from them stating my x and I would need to pay a fee (surprise). I thought I was supposed to pay the fee after it was complete to find out 2 weeks ago that they want the fee up front (lack of communication once again). I started the process a couple of months ago to attempt to do it on my own (thinking the whole thing was taking too long) but it appeared the business I work for would have had to do a lot of work to understand their part (working with the powers that be at the 401k fund, so I didn't continue to pursue that). Now to see if my x will pay his 1/2. I'm thinking, good luck with that.
Member
Join Date: Apr 2013
Posts: 453
I'm late to the game on this, but if it helps I do manage 401(K) plans.
401(K) plans are regulated under federal law, not state law. The only state law that would come in to play is those that determine how to divide marital assets. If you're looking for information on 401(K)'s and the Qualified Domestic Relations Orders (QDRO's), you can check out the Department of Labor and IRS websites.
The QDRO orders come from the court - they are generally worked out by the attorneys and approved by the judge. The fund & plan administrators have no say over the actual agreement as that is usually just one of many marital assets to be divided. I have seen QDROs where the entire account goes to the non-employee spouse, and others where it is split 50/50, etc.
Once the court order is approved, the plan administrator can provide you with the plan's form to give direction to actually split the account. The non-employee spouse can generally elect to leave the account with the plan, roll it over to another qualified account (another 401k or IRA) or cash it out. You only pay taxes if you cash out the account or any part of it.
I will suggest you keep on this to make sure it gets completed. I've seen these get forgotten for years and it is difficult to get done later.
Good luck 24 years...please let us know how it works out!
401(K) plans are regulated under federal law, not state law. The only state law that would come in to play is those that determine how to divide marital assets. If you're looking for information on 401(K)'s and the Qualified Domestic Relations Orders (QDRO's), you can check out the Department of Labor and IRS websites.
The QDRO orders come from the court - they are generally worked out by the attorneys and approved by the judge. The fund & plan administrators have no say over the actual agreement as that is usually just one of many marital assets to be divided. I have seen QDROs where the entire account goes to the non-employee spouse, and others where it is split 50/50, etc.
Once the court order is approved, the plan administrator can provide you with the plan's form to give direction to actually split the account. The non-employee spouse can generally elect to leave the account with the plan, roll it over to another qualified account (another 401k or IRA) or cash it out. You only pay taxes if you cash out the account or any part of it.
I will suggest you keep on this to make sure it gets completed. I've seen these get forgotten for years and it is difficult to get done later.
Good luck 24 years...please let us know how it works out!
Member
Join Date: Jun 2012
Location: Out in the Sticks
Posts: 1,788
Originally Posted by CeciliaV
Are you in a 28% tax bracket? I'm no lawyer, but I'm relatively well-versed on investments, and when you take an early distribution from a pre-tax investment account, you will have to pay taxes on that distribution. I believe that you are exempt from the early distribution penalty (10% I think) with a qualified distribution (such as in cases of qualified divorce settlements), but you will still have to pay taxes on it IF you are taking the cash or if you are rolling it over into a post-tax investment (such as a Roth IRA). If you do not have an immediate need for the cash and if you have an option to roll it into another 401(k) or into a traditional IRA, then you will likely avoid the taxes and the penalty. If you want to do that rollover into your own pre-tax investment account and if your spouse is not going to be taking an early distribution either, do talk to your lawyer - it may change the calculations he is using.
Be careful giving advice , if you are liscenced . Advice given over the net opens your firm up for liability .
I'm sure of this fact.
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Join Date: Sep 2011
Location: back woods USA
Posts: 171
24 years, Im going through the same situation now. My divorce was final in March but I was smart enough (and advised by my attorney) to have it written into the agreement that my XAH was to pay to have the QDROs drawn up and processed to split our pensions and annuities.
I have had to stay on top of him to get it done and he has put it off consistently. My attorney told me that if something happened and he died or remarried before the QDROs were filed I would be screwed so I have stayed on top of it. An attorney had to draw up the paper work and then send them to us...we then had to send them to the separate pension/401k accounts for approval which is where we are now..that has taken 6 months.
Now I am waiting for them to send them back and we then have to have them notarized and then submit them to the courts for approval. Its a humungous pain but someone said something about keeping on top of it because they can be put off for years...They are right.
We cashed out two 401k accounts that I had while we were married so the half I am receiving from his pension and annuity fund is all I have for retirement. He, of course, is bitter and spiteful about it so he is taking his sweet time with it. My accounts were used to get him out of a DUI and other situations because of his drinking...I don't feel bad for getting half of his at ALL.
I have had to stay on top of him to get it done and he has put it off consistently. My attorney told me that if something happened and he died or remarried before the QDROs were filed I would be screwed so I have stayed on top of it. An attorney had to draw up the paper work and then send them to us...we then had to send them to the separate pension/401k accounts for approval which is where we are now..that has taken 6 months.
Now I am waiting for them to send them back and we then have to have them notarized and then submit them to the courts for approval. Its a humungous pain but someone said something about keeping on top of it because they can be put off for years...They are right.
We cashed out two 401k accounts that I had while we were married so the half I am receiving from his pension and annuity fund is all I have for retirement. He, of course, is bitter and spiteful about it so he is taking his sweet time with it. My accounts were used to get him out of a DUI and other situations because of his drinking...I don't feel bad for getting half of his at ALL.
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